Many countries have been dwelling with the problem of inflation and cost-of-living crisis has been one of the top problems faced by the developed economies. There is surge in the price of almost all consumer products in the countries, but recent studies shows that 100 nations are facing worst blow from the global circumstances.
Economics has defined “inflation” as a simultaneous rise in the prices of most goods and services and also it is caused due to supple-demand imbalance. But in reality, “inflation” is lot more messier. Recently, International Monetary Fund (IMF) suggested that there will be significant inflation pressure around the world this year with developing economies being the worst hit. IMF has predicted inflation to reach 8.7% for 2022 in developing economies. But even in the most developed countries people are going without food. Which countries are the sufferer of this economic crisis and how they are tackling it?
- 1. Lebanon- This country is a small West Asian country, the consumer prices have spiked by over 200% pushing the consumers to pay a threefold average cost for commodities. The country’s economy is crippled by the financial crisis which came to a head in 2019. The nation has witnessed mishaps, piling debt and mismanagement which ultimately caused the multi-dimensional deterioration of the nation’s currency, the Lebanese pound.
- 2. In Kenya, inflation is running at a five-year high of nearly 8%. The prices of vegetables and other essential commodities have doubled and consumers are not being able to afford it.
- 3. In the UK, where inflation has climbed to its highest rate in 40 years, from 1.6% to 9.1% in 18 months. People are struggling to meet their ends and has to work double for expanses to be met. As energy and food prices are soaring, commoners has to go for state welfare for their rest expanses.
- 4. In Germany, inflation, is measured as the year-on-year change in the consumer price index, rose to 7.9% in May, the third record rate in a row since reunification in 1990. In the car-centric European nation, the crisis has been felt and debated most acutely at the petrol station, where drivers have had pay more than two euros a litre since March.
- 5. In India, the annual retail inflation is above 7%. Which is wreaking havoc on the tiny budgets of families who have yet to recover from Covid pandemic. Aside from grains such as rice and wheat, which are provided free for the poor, the price of almost every single item of food has gone up sharply. The cost of vegetables rose by 56% in the last month alone, partly because of a heatwave and partly because of rising input costs.
- The cost-of-living crisis or inflation is due to the firstly, due to the massive imbalance between the demand and supply of most things-groceries, rent, gas, consumer goods, and services. Second, major factor is the Russia- Ukraine war that has created, “an embargo against Russian oil”. Third reason of high inflation include climate change causing wheat and soyabean shortages that lead to high food prices and the expiration of the rent moratorium, which allowed landlords to hike up rents. Thus it is important to tackling the galloping inflation to reduce the cost-of-living crisis. As George Bernard Shaw said, “Lack of money is the root of all evil”, indeed its true in all means. The evil of society creeps from lack of money.
- To read more about inflation:- https://www.imf.org/external/pubs/ft/fandd
